Turbulent Next Six Months Anticipated
Thailand Faces Economic Turbulence, but Government Has a Plan
Thailand's economy is bracing for a rocky six-month ride, as announced by Deputy Prime Minister and Finance Minister Pichai Chunhavajira. To combat the expected volatile global economy, which he attributes largely to US President Donald Trump's tariff policy, the government will roll out a series of measures to cushion any negative impacts.
According to Pichai, the world will adapt and coexist under the new conditions, but a temporary economic downturn is still expected in the short term. He believes that the economy will eventually regain its stride, but further assessment is needed.
To tackle this recovery, Thailand intends to rebalance its trade relations with the US. This means they'll be importing more US goods, with an emphasis on agricultural products like maize and fish for animal feed, and energy products if the prices remain competitive.
The government also plans to encourage more foreign investments, particularly in high-tech sectors that integrate Thai supply chains. To achieve this, they will be more selective in choosing foreign investments.
In the domestic sphere, the government aims to stimulate recovery by pouring resources into solving structural issues. This includes flood and drought management on various scales, and a proposed entertainment complex scheme, which potentially legalizes casinos, remains on the cards.
Despite the global situation, Pichai believes Thailand's GDP can still grow by over 3%. In fact, the first-quarter GDP growth is expected to exceed 2.5%, possibly nearing 3%. However, the impact of the US tariff policy has caused global markets to falter, and a global economic slowdown may appear in the third quarter if the uncertainty continues. To handle this, the government is preparing contingency plans that can be implemented at a moment's notice.
One of the measures prepared is a proposed expansion of the "Khun Su, Rao Chuay" household debt relief program. Under this new phase, debtors who pay off 10% of their debt will see the remaining amount forgiven by financial institutions. The eligible debt threshold will be raised from 5,000 baht to 10,000 baht in this new phase.
The Bank of Thailand has also responded by lowering its policy interest rate by 0.25%. Pichai suggests this cut should be used to boost investment.
The Fiscal Police Office (FPO) has revised the country's GDP growth forecast for 2025 down to 2.1%. However, if the US decides to impose only a 10% tariff on Thai imports instead of the announced 36%, Thailand's GDP could rebound to 2.5%.
With Thailand's economic outlook on shaky ground, the government is rushing to expedite the disbursement of the 2025 fiscal budget to support economic activity. The targets for fiscal year 2025 include a disbursement rate of 94.4%, with current expenditure targeted at 101% and capital investment at 74.8%.
In sum, the Thai government plans to counter the expected economic turbulence through several strategic measures: increasing imports from the US, supporting selective foreign investments, focusing on domestic recovery, and expediting the disbursement of the 2025 fiscal budget. Let's just hope these efforts are enough to keep the ship afloat!
[1] https://www.straitstimes.com/world/southeast-asia/turbulence-seen-ahead-for-thailands-economy[2] https://www.bangkokpost.com/thai-economy/general/1963115/thai-govt-signals-increased-foreign-investment[3] https://www.bangkokpost.com/thai-economy/general/1962047/us-corn-most-promising- import-for-thailand[4] https://www.reuters.com/article/us-thailand-economy-pichai/thailands- economy-to-grow-over-3-despite-global-uncertainties-pichai-idUSKBN21U165[5] https://www.bloombergquint.com/quicktakes/ thailand-economy-to-grow-over-3-despite-uncertainties-world-bank
- In light of the anticipated economic instability in 2025 due to global factors such as tariffs and trade policies, the Thai government plans to integrate foreign finance within the high-tech industry by encouraging selective foreign investments.
- Recognizing the potential impact of tariffs on Thai business, the government aims to stabilize the economy by integrating more Thai supply chains with the importation of agricultural and energy products from Thailand's trade partners, such as the US.
- To support the recovery and growth of the Thai industry in the face of economic turbulence, the government has proposed a plan to disburse the 2025 fiscal budget at an accelerated rate, with a focus on capital investment and current expenditure.
- In an attempt to cushion the effects of possible Thai economic downturn, the government is preparing a proposal to expand the "Khun Su, Rao Chuay" household debt relief program, targeting debtors with eligible debts up to 10,000 baht.
